Economic policy of the first Donald Trump administration

The economic policy of the first Trump administration was characterized by the individual and corporate tax cuts, attempts to repeal the Affordable Care Act ("Obamacare"), trade protectionism, deregulation focused on the energy and financial sectors, and responses to the COVID-19 pandemic.

[1] During Trump's first three years in office, the number of Americans without health insurance increased by 4.6 million (16%),[8][9] while his tax cuts favored the top earners, and failed to deliver on its promises,[10] worsened income inequality, and eroded the country’s revenue needed to continue investment to critical programs like social security and medicine.

[22] Economist Paul Krugman expressed a similar view in February 2020, writing that Trump's initial promises of a more bi-partisan agenda (e.g., raising taxes on the rich, infrastructure investment and preserving safety net programs) ultimately gave way to pursuing more typical Republican policy priorities of tax cuts and reduced safety net spending, although without the previous concerns about the budget deficit that Republicans expressed during the Obama Administration.

[34] Writing in The Washington Post, Heather Long explained in August 2019 that: "[A] closer look at the data shows a mixed picture in terms of whether the economy is any better than it was in Obama's final years.

Nominal wages, consumer and business confidence, and manufacturing job creation (initially) compared favorably, while government debt, trade deficits, and persons without health insurance did not.

[74][75] The Washington Post cited research indicating that mortality increases about one person per 800 without health insurance, so 2 million more uninsured represents 2,500 avoidable deaths per year.

[94] CBO released an analysis in May 2019 that stated: "By 2021, in the current baseline, 7 million more people are uninsured than would have been if the individual mandate penalty had not been repealed; subsequently, that number remains roughly constant to the end of the projection period in 2029.

"[95] The New York Times explained that the Affordable Care Act (ACA) was passed in 2010 and extended protections to those with pre-existing health conditions, requiring insurers to "offer coverage to anyone who wishes to buy it, with prices varying only by region and age of the customer."

[99] The Centers for Medicare and Medicaid Services website states that 50–129 million non-elderly Americans (19–50 percent) have pre-existing conditions that could place them at risk of losing insurance coverage without ACA protections.

However, Politifact rated this claim as "Mostly False", explaining that: "In 2019, 4,311 prescription drugs experienced a price hike, with the average increase hovering around 21%, according to data compiled by Rx Savings Solutions, a consulting group.

"[103] The Kaiser Family Foundation surveyed the employer-sponsored health insurance market, reporting in September 2019 that:[55] President Trump and Republicans in Congress tried repeatedly to repeal or replace the ACA, without success.

Kevin Hassett, chairman of Trump's Council of Economic Advisers, noted days earlier that the deficit was "skyrocketing," which is consistent with the analysis of every reputable budget analyst.

"[150] President Trump falsely claimed in August 2018 that "because of tariffs we will be able to start paying down large amounts of the $21 trillion in debt that has been accumulated...while at the same time reducing taxes for our people."

[164] With the notable exception of deficits, actual results for 2017–2019 for these key variables compare favorably against the baseline, as the Tax Cuts and Jobs Act provided a stimulus and the economy was further from full employment than CBO anticipated: A budget document is a statement of goals and priorities, but requires separate legislation to achieve them.

[204] To help address lost income for millions of workers and assist businesses, Congress and President Trump enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES) on March 27, 2020.

While the Act carried an estimated $2.3 trillion price tag, some or all of the loans may ultimately be paid back including interest, while the spending measures should dampen the negative budgetary impact of the economic disruption.

[233] During his February 2019 State of the Union Address, Trump asserted, "Wages are rising at the fastest pace in decades, and growing for blue collar workers, who I promised to fight for, faster than anyone else.

[268] Through October 2020, coal-fueled electricity generating capacity declined faster during Trump's presidency than during any previous presidential term, falling 15% with the idling of 145 coal-burning units at 75 power plants.

[277] The Trans-Pacific Partnership (TPP) was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States.

The agreement aimed to lower both non-tariff and tariff barriers to trade, establish an investor-state dispute settlement mechanism, and promote economic growth, job creation, innovation, and higher living standards.

Politifact rated this assertion "Pants On Fire,"[281] while the conservative Wall Street Journal editorial board wrote, "It wasn't obvious that [Trump] has any idea what's in [TPP]".

[310] Further, the strategy of protectionism (i.e., to impose trade barriers such as tariffs, to retain or bring jobs back that were off-shored) as opposed to retraining and relocating workers adversely impacted by globalization, is debatable.

[42] The uncertainty for businesses created by the trade war with China following the imposition of tariffs in 2018 likely contributed to a significant decline in manufacturing activity and job creation in 2019, the opposite effect Trump intended.

"[315] Economist Paul Krugman argued in October 2019 that manufacturing had entered a "mini-recession", with production down and employment in Wisconsin, Michigan and Pennsylvania falling significantly from summer 2018 to December 2019, due in part to Trump's trade policies and other behavior that adversely impacted business investment.

[316][317] Analysis published by The Wall Street Journal in October 2020 found the trade war Trump initiated in early 2018 did not achieve the primary objective of reviving American manufacturing, nor did it result in the reshoring of factory production.

[324] Economist Austan Goolsbee explained in October 2019 that GDP growth is a function of the number of people and income per person (productivity), and restricting immigration hurts both measures.

[356] The U.S. Federal Reserve then reversed course in 2019 and both cut rates and resumed expanding its balance sheet, boosting the stock market despite uncertainty created by Trump's trade policies.

In nominal terms (not adjusted for inflation) it declined in 2008 due to the Great Recession but resumed steadily rising in 2009 and reached its sixth consecutive annual record high in 2017.

[370] The White House Council of Economic Advisers estimated in October 2017 that the corporate tax cut of the TCJA would increase real median household income by $3,000 to $7,000 annually.

[382] Trump's withdrawal from the Iran nuclear deal in 2018, as well as OPEC quotas established while the global economy was growing (pre-recession), put upward pressure on gasoline prices.

The CBO forecast in April 2018 that under current policy, the sum of annual federal budget deficits (debt increases) would be $13.7 trillion over the 2018–2027 time period. This is $4.3 trillion higher (46%) than the CBO January 2017 baseline of $9.4 trillion. The change is mainly due to the Tax Cuts and Jobs Act of 2017. This was later revised upward due to the coronavirus pandemic. [ 30 ]
Job Growth by U.S. president, measured as cumulative percentage change from month after inauguration to end of term. As of September 2020, the number of jobs was 2.7% below the January 2017 level when President Trump was inaugurated, and 7.0% below the February 2020 peak. About half of the peak-to-trough jobs lost had been regained.
Economic scorecard comparing Trump and Obama presidencies. Refer to sources on the detail page.
Panel chart illustrates nine key economic variables measured annually from 2014 to 2019. The years 2014–2016 were during President Obama's second term, while 2017–2019 were during President Trump's first term. Refer to citations on detail page.
U.S. uninsured number (millions) and rate (%), including historical data through 2016 and two CBO forecasts (2016/Obama policy and 2018/Trump policy) through 2026. Two key reasons for more uninsured under President Trump include: 1) Eliminating the individual mandate to have health insurance; and 2) Stopping cost-sharing reduction payments. [ 67 ]
CBO forecasts that the 2017 Tax Act will increase the sum of budget deficits (debt) by $2.289 trillion over the 2018–2027 decade, or $1.891 trillion after macro-economic feedback. [ 107 ]
CBO and JCT estimate of the distribution of impact by income group (average dollars per taxpayer) under the Tax Cuts and Jobs Act. On average, taxpayers in the income groups highlighted in yellow will incur a net cost (shown as a positive figure as this reduces the budget deficit), mainly due to reduced healthcare subsidies. Higher income taxpayers receive a benefit via tax cuts (shown as a negative number as this increases the budget deficit). The percent of taxpayers in each income group is also shown for the 2023 period. [ 108 ] [ 109 ]
Distribution of benefits during 2018 by income percentile under the Tax Cuts and Jobs Act (Conf. Cmte. version) based on data from the Tax Policy Center. The top 10% of taxpayers (incomes over $216,800) receive 52% of the benefit, while the bottom 60% (incomes under $86,100) receive 17% of the benefit. This excludes the impact of reduced ACA subsidies. [ 110 ]
Comparison of U.S. federal revenues for two CBO forecasts, one from January 2017 (based on laws at the end of the Obama Administration) and the other from April 2018, which reflects Trump's policy changes. Key insights include: 1) Tax cuts reduce revenue collections relative to a baseline without them; 2) Tax revenues rise each year under both forecasts as the economy grows; and 3) The gap is larger initially, indicating larger stimulus effects in the earlier years. [ 164 ] [ 30 ]
CBO current law baseline as of January 2017, showing forecast of deficit and debt by year. The sum of deficits forecast from 2018 to 2027 was $9.4 trillion. This is the baseline prior to any changes by President Trump. It is the financial position he "inherited" from President Obama.
The CBO April 2018 baseline for the 2018–2027 period includes a $1.6 trillion higher debt (sum of deficits) projection than the June 2017 baseline and $2.3 trillion higher than the January 2017 baseline. This is due to the 2017 Tax Act and other spending legislation. The effect from the legislation is partially offset by economic feedback and technical changes. [ 30 ]
Federal budget deficit CBO baseline forecast from January 2017 assuming continuation of Obama policy, versus actual for fiscal years 2017–2020. The significant deficit increases for 2018 and 2019 were due to the Tax Cuts and Jobs Act and other spending legislation, while 2020 also included relief/stimulus legislation due to coronavirus.
Congressional Budget Office (CBO) baseline scenario comparisons: June 2017 ($10.1 trillion debt increase over a decade), April 2018 ($11.7 trillion, which reflects Trump's tax cuts and spending bills), and April 2018 alternate scenario ($13.7 trillion, which assumes extension of the Trump tax cuts, among other current policy extensions). [ 30 ]
Job creation for Trump's first 36 months (through January 2020) vs. Obama's last 36 months ($1.0 [!]). [ 209 ]
U.S. real GDP growth for full year 2012–2019. Growth averaged 2.4% in Obama's last 3 years versus 2.7% in Trump's first 3 years. [ 238 ]
U.S. real GDP quarterly growth from 2014 to 2019. [ 239 ]
The U.S. Trade Deficit represents imports greater than exports; it was $628 billion (3.0% GDP) in 2018 and $617 billion (2.9% GDP) in 2019. [ 270 ] The U.S. has a trade deficit in goods partially offset by a trade surplus in services. The goods-only trade deficit with China was $375 billion in 2017, $420 billion in 2018, and $346 billion in 2019. [ 271 ]
Number and share of foreign born residents in the U.S. from 1900 to 2019. In 2019, there were 42.4 million foreign-born U.S. residents, or 16.3% of the civilian noninstitutional population of 259.5 million. [ 319 ]
Cumulative stock market returns (S&P 500) by President as of trading day 763 of their presidency. Trump was tied for 3rd of the past six Presidents. [ 348 ]
U.S. median family net worth peaked in 2007, declined due to the Great Recession until 2013, and only partially recovered by 2019. The much larger average shows wealth inequality. [ 349 ] Discontent with this result may have been a contributing factor to President Trump's 2016 election. [ 350 ]
Four charts that describe trends in income inequality in the United States.